Ken Fenner
Active member
Don, I haven't disected the formula yet, this is what is printed in the finance section of one listing.
Asking price: $184,900
Rent 1: $800
Rent 2: $800
Rent 3: $150 (garage)
GRM: 8.68
Cap rate: 8.99
Total Ann Exp: $4,674 (property taxes)
Net Operating Inc: $16,626
The Breakdown and questions:
At a 5.5% rate on a 15-year mortgage and factoring tazes and insurance I would have a nut of $1,160 per month. My out of pocket will be about $55,000. Positive cash flow over the fifteen years will be about $10,000. That should cover repairs or is that far too low? Both units have new electrical and panels, new appliances, new carpet, new HVAC, and water heaters are two years old. Rubber roof is four years old. I figure an additional $20,000 in expenses over the 15 years for moveouts, property maintenance, etc. These units do not stay empty. the area is desirable and actually hard to find two bedroom units.
Investment: $55,000 (down payment and settlement)
Operational Costs: $20,000
Property value at end of loan term: $300,000 (these units were selling for $235K 18 months ago)
So is turning $75,000 into $300K over the course of fifteen years a good bet? With yearly compounding, that comes out to an interest rate of 10.5% per year.
You guys that have owned investment property, are the parts that are bolded above realistic?
Asking price: $184,900
Rent 1: $800
Rent 2: $800
Rent 3: $150 (garage)
GRM: 8.68
Cap rate: 8.99
Total Ann Exp: $4,674 (property taxes)
Net Operating Inc: $16,626
The Breakdown and questions:
At a 5.5% rate on a 15-year mortgage and factoring tazes and insurance I would have a nut of $1,160 per month. My out of pocket will be about $55,000. Positive cash flow over the fifteen years will be about $10,000. That should cover repairs or is that far too low? Both units have new electrical and panels, new appliances, new carpet, new HVAC, and water heaters are two years old. Rubber roof is four years old. I figure an additional $20,000 in expenses over the 15 years for moveouts, property maintenance, etc. These units do not stay empty. the area is desirable and actually hard to find two bedroom units.
Investment: $55,000 (down payment and settlement)
Operational Costs: $20,000
Property value at end of loan term: $300,000 (these units were selling for $235K 18 months ago)
So is turning $75,000 into $300K over the course of fifteen years a good bet? With yearly compounding, that comes out to an interest rate of 10.5% per year.
You guys that have owned investment property, are the parts that are bolded above realistic?